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As stock exchanges around the world merge to expand their
operations, financial analysts say the Nigerian Stock Exchange (NSE) is not
“ripe” for that kind of business. The New York Stock Exchange (NYSE), Euronext
and Germany’s Deutsche Bourse on February 15 reached an agreement to combine
business. If successful, the $10 billion deal will form the biggest exchange
operator in the world.

Also, the London Stock Exchange had on February 9 announced a
$6.9 billion bid to take over Toronto Stock Exchange operator TMX Group. The
move will create a combined group that will be jointly headquartered in London
and Toronto. The two companies are waiting for a review by the Canadian
government to finalise the process. However, Opeyemi Agbaje, an economic
analyst and chief executive officer of Resources and Trust Company Limited, a
business advisory firm, said,

“The Nigerian Stock Exchange (NSE) is a monopoly so the issue of
mergers may not be so relevant to us now,” adding that the global merger trend
“may be driven by profit and scale considerations since many global Exchanges
are now business ventures with profit objectives.” But Virginus Agada, a
stockbroker at Eurocomm Securities Limited, a stockbroking firm, disagreed that
the NSE is a monopoly market.

According to him, “The
issue of merger with another stock exchange cannot be thought of in our market
now. Is it not when you’re healthy that you begin to look for somebody to stay
with you? Our market is not that healthy and therefore it’s not ready for
merger talks now, but we may get there in the future.” He said although there
are benefits to enjoy in mergers such as economies of scale and chains of
ideas, “but I don’t think that should bother us now in this country. Right now
we’re trying to gain confidence from investors.”

He added that “no matter how large investors are willing to come
to the market; if you don’t have enough facility to support them they won’t get
quality benefits.” Mr. Agada, whose firm is one of the affected stock broking
firms yet to meet the NSE’s N70 million capital base requirement for
stockbrokerages, said, “If you want to merge, you should talk about things
other Exchanges can learn from you. We (NSE) have not even shown good examples
within the West Africa region and Africa at large let alone talking of the
developed worlds.”

Detola Olukorede, an equity analyst at Investment Option, a fund
management firm, said, “The NSE is not ripe yet for merger like it’s happening
around the world now.” He said this is because the nation’s bourse is still
“underdeveloped in terms of infrastructure and operation.”

Wave of mergers

The merger of the New York Stock Exchange (NYSE) Euronext and
Germany’s Deutsche Bourse is structured as a combination of Deutsche Bourse and
NYSE Euronext under a newly created Dutch holding company, which is expected to
be listed in Frankfurt, New York and Paris. According to the agreement, when
the merger is completed, Deutsche Bourse stakeholders are set to control a 60
percent stake, with NYSE Euronext investors commanding 40 per cent of the
combined mega-firm’s equity, on a fully diluted basis. The deal is, however,
expected to be closed at the end of 2011. After that, the merged group will
boast more than $20 trillion in annual trading volume and operations in several
European countries and the United States.

A similar case also happened in Asia. Singapore Exchange Limited and ASX
Limited, operator of the Australian Securities Exchange, announced their $8.3
billion merger proposal on October 25, 2010. The merger is expected to create
the fifth largest Exchange operator in the world. Meanwhile, reports say the
two companies released a revised proposal on February 15 in a bid to boost the
deal’s chances of getting regulatory approval in Australia.

The recently-introduced biometric Automated Teller Machines
(ATM) will help banks and customers check fraud complaints in the banking
industry, analysts have said. First Bank of Nigeria Plc introduced biometric
ATMs into the country.

The group managing director and chief executive officer of the
bank, Bisi Onasanya, speaking during the introduction, had said the ATMs were
purchased to protect the data resources of its customers.

The biometric ATM solution is available to the bank’s existing
cardholders who may wish to add biometric authentication as part of their
transaction approval process on First Bank ATMs in addition to PIN selection,
while new cardholders will be issued cards with only the biometric
authentication functionality.

Under the biometric system, cardholders are identified by their
fingerprints, making it almost impossible for any other person to use it in
case the card is lost or stolen. Victor Ndukauba, a finance and research
analyst at Afrinvest, an investment advisory and research firm said: “It will
help in terms of security. It will reduce the exposure to and tendency of
fraud, as regards the use of ATMs. It will have an impact because it would mean
fewer complaints from users.”

A random sampling of other banks showed that they are working on
improving their ATM security systems. At Oceanic Bank, a source who did not
wish to be quoted because he was not authorised to speak to the media, said
that while the bank may not have introduced the biometric ATMs to its
customers, they were willing to upgrade their technology for the convenience
and safety of their customers.

“Everything that would reduce the cases of fraud in all its
ramifications is what every bank is working towards,” he said, adding that
banks try to upgrade their existing technology as soon as new ones are
introduced into the market.

“We have upgraded to the chip and pin” a source at Spring Bank
said. “We are yet to introduce the biometric ATM but we make sure we upgrade
our technology for the security of our customers’ funds.”

A long way

Mario Yanez and Annuar Gomez of the University of Miami, School
of Business Administration in a paper titled ‘ATM and biometrics, a
socio-technical business model’, said that parallel to the development of the
industry, different modes of fraud have made it necessary to reinforce the
levels of security utilized in ATMs.

According to them, “Biometric technology is based on the
scientific fact that there are certain characteristics of living forms that are
unique and not repetitive for each individual; these characteristics represent
the only technically viable alternative to positively identify a person witout
the use of other forms of identification more susceptible to fraudulent
behaviour.”

Biometric identification is utilized to verify a person’s
identity by measuring digitally certain human characteristics and comparing
those measurements with those that have been stored in a template for that same
person.

According to them, banks, other financial institutions and
retailers could increase the volume and reduce their ATM unit transaction
costs; increase their revenues and expand their potential customer base using
the biometrics ATMs.

Biometrics is also increasingly included in a wide range of
verification applications in e-commerce, financial electronic transactions and
other financial transactions.

Banks are responsible

Ariyo Kosoko, the spokesperson of Interswitch Limited, an
electronic transaction switching and payment processing company, said that
banks are responsible for upgrading their ATMs.

“It is the banks, and not the connecting companies, that are
responsible for upgrading the technology of their Automated Teller Machines,”
he said. “We just help the banks in their connectivity and make sure cards can
work on machines. We provide interconnectivity. Upgrading the ATM technology is
really left at the discretion of the individual banks. Ours is to make sure
that notwithstanding any type of ATM technology, operated by the banks,
outdated or modern we provide the adequate interconnectivity.”

History of ATM fraud

For years, the banking industry has been fighting the battle of
fraudsters swindling customers through ATMs. Before the enforcement of the chip
and pin cards last year, the banking system was awash with complaints of the
“mysterious” disappearance of funds from customers’ accounts, as statistics
showed that at least 30 million dangerous ‘magnetic stripe’ ATM cards were
carried about by innocent citizens.

Experts said these toxic ATM cards were highly prone to fraud,
as they could easily be cloned once fraudsters got hold of certain information.
The criminals would swipe the band of magnetic material on the card, which
contains vital data, past a card reader or reading head. Although the rate of
reported ATM fraud has reduced over the months, experts say biometric ATMs
would guarantee more safety for customers’ funds.

The universality of music has made it a potent tool for brands
to utilise in building brand image and creating instant brand recall. Music has
been discovered to inspire and move the target audience to action. While some
brands use music creatively to promote the brand through radio jingles and TV
commercials, other brands adopt musical talent programmes to build brand
association with the target audience.

When Skye Bank introduced
‘Hakunna Matata’, it was one that resonated with the audience. The follow up
campaign, ‘‘I wish I have friend saying yes to my dreams” also provided
soothing relief. It has been discovered overtime that music has an enduring
effect on consumers especially when the brand has a mass appeal.

The music appeal in the Indomie “Mama do good” is one that every
child has adopted as a sing along. It really exemplified the brand values as
one that provides the satisfaction and fulfilment the consumers’ desire.
However, a major focus of this column is on talent discovery through music which
appeals more to the youth market.

The last edition of ‘Project FAME’ is one I will not forget in a
hurry. This is due to utmost importance my young boys attached to the
programme. My children were always excited with the performance of the
contestants. This is because of their musical prowess and talent. Matters got a
halt when my son almost compelled me to start voting for his preferred
contestants even when I am not an MTN subscriber!

The above illustrated story speaks volume about the enormous
gains of leveraging brand image through music.

Music is one platform that brands have been adopting to leverage
brand image and build followership. It is one veritable platform to build brand
loyalty amongst the core target. The good thing is that music is a broad
platform that appeals to all and sundry. Regardless of the age group, there is
a particular genre of music that appeals to a particular group.

Some brands have been using music as a springboard to identify
with some core target and build loyalty. This is exactly the case with the
Telecommunication companies. The MTN Project Fame is one that unearths the raw
musical talents of youth. It brings to fore the potentials and innate gifts of
the youth. This has a major impact as every talented youth looks forward to
feature in the programme. The Nigerian Idol show by Etisalat is also one
laudable platform to develop the potentials of youth in music.

This is one area that brands can still impact the lives of youth
by identifying talents and developing them. It should actually reach a stage
where music producers should fall over themselves to produce albums of such
identified stars. What this translates to is that a single brand can produce
several stars in music through their talents. When brands go extra mile to develop
youth, it reduces social vices and builds brand loyalty for such brands.
Through this, brands also demonstrate to youth that they can live without drugs
and other social ills.

Music platform also gives consumer experience that enable brands
create strong associations. This is also evident in the Regal Gin Fuji Slam
which has Fuji act, Wasiu Odetola (aka Pasuma) performing at the slams across
the South West region. Fuji music is acceptable to brand consumers across the
South West States and this was used as a springboard to connect with the target
audience. The brand leveraged music to promote brand benefits while also
creating fun and entertainment which are synonymous with the brand personality.

The benefits of leveraging brands through music are innumerable.
Brands should elevate the music platform by building brand icons through raw
talents. This will massively build loyalty and create “an army” of brand
loyalists. There should be a national event that should be a “must” for
participation. When brands builds music icons, it enhances brand image and
drive brand visibility across the target segment.

Through the musical talent shows, it has been a worthwhile
experience watching potentials being developed and skills harnessed for maximum
impact. A brand can establish an academy to train and nurture the musical stars
to establish themselves in their career. This should be the next level for the
sponsored musical shows. Beyond the prizes being won, there should be an
enduring legacy that brands should leave behind. There are still untapped
opportunities in this area that brands can leverage upon especially with the
army of youth without employment. Brands can still leverage marketing efforts
through a new high ground in building followership and retaining strong
pedigree for generations.

TO OUR DEAR READERS

While your comments and
criticisms are welcome to make this column better, please desist from making
unsubstantiated allegations. This column is not sponsored to perform hatchet
jobs for any brand or organization. It is not paid for to serve as a mouth
piece of any company.

Still smarting from their losses in the wake of the stock market
crash in 2008, many local investors are yet to regain confidence in the
Nigerian capital market. As a result, foreign investors now account for a
larger share of transactions on the Nigerian Stock Exchange (NSE).

Interim administrator of the NSE, Emmanuel Ikhazobor, who
confirmed this, said the major challenge facing the Nigerian capital market
regulators was to build confidence and put in place systems that would enhance
efficiency and transparency.

He was speaking yesterday at the annual capital market
conference organised by Business Day Newspaper with the theme, ‘Can Nigeria
Lead Again?’

“It is true. As at yesterday (Wednesday), foreign investors
accounted for 68 per cent of the volume and value of market transactions.
Confidence has not grown among local investors, who are interested in taking
profit; while the foreign investors are taking longer position in the market,”
Mr. Ikhazobor said.

Total market capitalisation, which peaked at about N12.6
trillion in March 2008, shed about 70 per cent in value as investors moved to
alternative windows. The market has, however, been on the recovery, rising by
about 18 per cent in January from the previous month’s figures.

Increase trading hours

Mr. Ikhazobor said as part of efforts to improve liquidity, the
NSE extended the trading period by two hours from 9.30am to 2.30pm in order to
attract more foreign participation. He said the extension resulted in the
increase in volume, value, and the number of deals in the market.

He further disclosed that the extension, which became effective
December 6 last year, was to be reviewed in less than six months.

“From the result we have achieved, we may not wait for six
months. We may need to increase the trading hours again in order to increase
trade on our market,” he said.

Mr. Ikhazobor also said the regulators were looking at removing
the five per cent cap on share price: “We are looking at scenarios. If we
discover that it will increase liquidity, we will tamper with that also.”

Director general of the Securities and Exchange Commission
(SEC), Arunma Oteh, said there was need for more institutional investors to
play in the market: “Traditionally, our market has been retail driven. What
will enhance liquidity in the market is if there are more institutional
investors.”

She said rather than investing directly, retail investors should
be encouraged to pool their funds together under registered investment scheme
for fund managers to invest on their behalf.

Increase investor
confidence

Ms. Oteh said as part of plans to increase investor confidence
in the market, it was putting in place effective regulation and good corporate
governance code.

“A world class market is one that engenders investor confidence,
has breadth and depth in terms of product offering, is characterised by market
integrity, a strong and transparent disclosure and accountability regime,
fosters good corporate governance, and is fair and robust, and efficient market
place,” Ms. Oteh said.

On his part, managing director of the Asset Management
Corporation of Nigeria (AMCON), Mr. Mustapha Chike-Obi, said the challenge was
to get investors back to the market and create more products to deepen the
market.

“I think we must have securities lending to encourage investors
to express themselves. Luckily, AMCON is going to end up with a large portfolio
of securities which we pledge to hold for two years at the minimum. I want to
tell you, if you want to borrow AMCON’s portfolio of shares, you have those
already. That will be a start,” Mr. Chike-Obi said.

He said operators need to rise up to the challenge of creating products that
would suit the investment needs of Nigerians.